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Legal Eagles: Closed session on real estate acquisition 

by John Phelps, League Associate General Counsel

Public bodies, including municipal governing boards and councils, holding closed sessions to consider acquisition of real property must follow both statutory and
case law requirements when calling the closed session.

North Carolina’s open meetings law, found in N.C. General Statutes Chapter
143, Article 33C, provides that official meetings of public bodies must be open
to the public. However, these statutes also permit a public body to hold closed
sessions for specified purposes. During these closed sessions the public may be
excluded.

The procedures to call a closed session are found in General Statute 143-318.11(c). It provides that a public body may hold a closed session only when a motion to do so is made and adopted at an open meeting. Additionally, the motion must cite one or more of the permissible purposes for closed sessions listed in the statute.
For two of those permissible purposes subsection (c) requires that additional
information be disclosed in the motion. For motions based on subsection (a)(1),
(prevent the disclosure of information that is confidential or privileged under state or federal law), the motion must also state the name or citation of the law that renders the information privileged or confidential. Motions based on subsection (a)(3) (consider and give instructions to an attorney on handling of a claim) must identify the parties in each existing lawsuit concerning which the public body expects to receive advice from its attorney.

In addition to the statutory requirements for calling closed sessions, the North Carolina Court of Appeals has in case law established procedures to be followed when calling a closed session to consider acquisition of real property. As mentioned above, a motion to call the closed session must cite one of the permissible purposes. In the case of real property acquisition, General Statute 143-318.11(a)(5) authorizes a closed session to establish or to instruct the public body’s staff or negotiating agents concerning the position to be taken on behalf of the public body in negotiating the price and other material terms of a contract for
acquisition of real property.

Subsection (a)(5) was the focus of the Court in Boney Publishers, Inc. v. Burlington City Council, 151 N.C. App. 651, 566 S.E.2d 701 (2002). The Council entered into a closed session to consider an option to purchase a single tract of real estate for use as a public park, believing that the location of the property, its intended purpose and its owners were material terms of the contract and should not be disclosed.

The Court ruled that subsection (a)(5) does not permit a public body to deny access to matters relating to the terms of a contract for acquisition of real property unless those terms are both material to the contract and are also actually subject to negotiation. In the case, the only material terms subject to discussion were the offering price and the structuring of the conveyance. While it was noted that there may be cases where the location, intended use of property, and owners may constitute material terms to be negotiated, the Court found that such was not the
situation presented.

Consequently, the Court held that, unless one of the following matters is actually under negotiation, a public body must, before the closed session, disclose: the location of the property proposed for acquisition; the intended use of the property; and the identity of the owners of the property.

Accordingly, when calling a closed session to consider acquisition of real property, always remember to make the motion in open session, cite the permissible purpose for the closed session and, unless these items are subject to negotiation, disclose the location of the property, its intended use and the identity of the owners.